Trump's Hormuz Toll Is the Same Scheme His Own Treasury Called Extortion

On May 27, the US Treasury sanctioned an Iranian body called the Persian Gulf Strait Authority, which the IRGC had set up to vet ships and collect fees for passage through the Strait of Hormuz. Treasury Secretary Scott Bessent called the scheme "maritime extortion"¹ and threatened to sanction Oman² for even indirectly facilitating tolls. Trump himself, asked about an Iran-Oman toll arrangement, said the strait is international waters and "nobody's going to control it."³

Seven weeks later, the President of the United States proposed the same mechanism with an American flag on it. On Monday, after Iranian strikes on shipping collapsed the June ceasefire and triggered three consecutive nights of US strikes, Trump announced he was reinstating the naval blockade of Iranian ports and declared that America would henceforth be the "GUARDIAN OF THE HORMUZ STRAIT," to be "reimbursed, at the rate of 20% on all cargo shipped"⁴ through a waterway that in normal times carries about 20 million barrels of oil a day, a fifth of world consumption⁵. Oil jumped past $100. And the obvious question presented itself: is this the founding document of a pay-to-play security order, in which the US Navy becomes a subscription service, or an improvisation that will die on contact with law, markets, and allies?

I think the impulse is durable and the instrument is doomed, and the distinction matters, because the impulse will be back in other forms. Start with what a functioning toll regime would require: a legal basis, paying customers, and a product. This one has none of the three.

The legal problem is not a technicality. Under Part III of the UN Convention on the Law of the Sea⁶, straits used for international navigation fall under "transit passage," a regime that guarantees ships continuous, unimpeded movement and gives no state, littoral or otherwise, the right to charge for it. Hours after Trump's post, the International Maritime Organization, the UN's shipping regulator, said there is "no legal basis through which to introduce mandatory tolls simply to transit through a strait."⁷ The more damning objection comes from inside the administration. Secretary of State Marco Rubio spent late June touring Gulf capitals insisting that no country on earth may charge for international waterways, dismissing Iran's fee-versus-toll wordplay as "a game of semantics,"⁸ and reporting "zero support"⁹ among Gulf states for any charge on the strait. The US even co-signed a joint statement with the Gulf Cooperation Council rejecting "any tolls, fees, or attempts to assert control"¹⁰ over Hormuz. Washington built an entire sanctions architecture on the premise that tolling this strait is illegitimate, then adopted the practice it had criminalized. Shipping lines noticed: Hapag-Lloyd called the plan "fundamentally wrong,"¹⁷ pointing out that Suez and Panama charge for canals somebody built and maintains, while Hormuz is simply the ocean.

Then there are the customers. Trump was explicit on Fox that the payers he has in mind are wealthy Gulf allies who "can't be expected"¹¹ to enjoy American protection free. None has agreed. Their formal position is the GCC statement above, and their practical position was written this week in missile fire: Iran struck two UAE-linked tankers, the Mombasa and Al Bahiyah, with cruise missiles in Omani territorial waters, killing one crew member and injuring eight¹², while Bahrain sounded sirens, Jordan intercepted Iranian missiles, and Yemen's Houthis, the Iran-aligned movement that controls northern Yemen, targeted Saudi Arabia's Abha airport¹³ with missiles and drones. For Riyadh or Abu Dhabi, openly bankrolling a US toll would mean paying for the privilege of becoming a more legitimate target.

And finally the product itself. A protection fee presumes protection. But the market that actually prices Hormuz risk, war-risk insurance (the separate cover shipowners must buy to enter a conflict zone, charged as a percentage of hull value), is pricing violence, not the American umbrella. Premiums softened to roughly 2 percent of vessel value after the June ceasefire and snapped back toward 5 percent after three ships were attacked last week¹⁴; Lloyd's Market Association's marine head put it plainly: "War-risk rates have moved as risk has moved."¹⁵ Marsh, the world's largest broker, says rates now run anywhere from 2 to 6 percent of a ship's value¹⁶, against a fraction of a percent before the war. Meanwhile traffic collapsed again, to just 14 vessels on Sunday from 37 a week earlier¹⁷, per Kpler data. Dozens of CENTCOM strikes on Iranian missile, drone, and small-boat sites have not stopped Iran from disabling tankers inside the supposedly safe southern corridor. Trump is charging for safety the US Navy cannot yet deliver.

The serious case on the other side deserves a fair reading, and it runs like this: legality was never the point. Trump has repriced American protection everywhere, extracting a higher NATO spending target and pressing Seoul for payment, and Hormuz is simply the same doctrine applied to the world's most valuable chokepoint. Gulf rejection is opening-stage bargaining, not refusal, because exit is physically impossible. That last part is genuinely true. Saudi Arabia's East-West pipeline, ramped to 7 million barrels a day of theoretical capacity¹⁸, plus the UAE's line to Fujairah, deliver perhaps 3.5 to 5.5 million barrels a day of real bypass¹⁹, against 20 million that used the strait; Kuwait, Qatar, and Iraq have essentially no alternative. And there is precedent for US naval protection becoming routine here: Operation Earnest Will²⁰ escorted reflagged Kuwaiti tankers through the Tanker War in 1987-88. The only innovation, on this view, is the invoice.

But dependence on the strait is not the same thing as dependence on the toll, and the week's events show why the coercion doesn't close. A monopolist can charge for access; Washington is not a monopolist in Hormuz, because Iran retains a violence veto over every transit, which is precisely why premiums and traffic ignore the American guarantee. Worse, Trump's move handed Tehran the argument it had been making all spring. Foreign Minister Abbas Araghchi responded that Trump was right that guardians deserve compensation, declared Iran the strait's eternal guardian, and undercut the price: "20% is of course too much. We will be fair."²¹ Shippers now face two rival fee claims from two belligerents shooting at each other. That is not an emerging order; it is a price war between protection rackets, and rackets are exactly what insurers, flag states, and the IMO refuse to normalize.

My best guess about what the 20 percent actually is: an opening bid. The June memorandum left the future administration of the strait to be negotiated over 60 days²², a clock that runs out in mid-August, and Trump has now planted a maximalist claim on the table across from Iran's. The transactional instinct behind it will outlive this episode, and Gulf states should expect the bill to reappear as basing fees, arms packages, or investment pledges rather than a per-cargo levy. The test for whether I'm wrong is admirably concrete: a documented toll payment actually collected by the US government from a Hormuz transit. Until that first dollar shows up, the Guardian of the Hormuz Strait is a slogan taped to a toll booth that no law authorizes, no ally will fund, and no tanker trusts enough to drive through.